5 Step Guide to Start Your Debt Free Journey

Are you seeking more freedom financially? A journey towards debt-free living?

I’m guessing you are here because you want to get rid of the thought of debt at the back of your mind. I understand you!

It’s a great feeling having total control over where your income is spent. 

This post is for you wanting to start your debt-free journey.

 5 easy steps and you’re on your way to more freedom. 

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1. Find Your ‘Why’ 

Finding your ‘why’ is key to keeping the motivation going during your journey towards a debt-free life.

Most people, I guess, would answer if asked whether they wanted to become debt-free:
Yes, of course, it would be great to somehow reach this achievement.

But fully avoiding working out their inner reason for wanting to do so. 

Having a very specific ‘why’ to you is the difference between those who succeed and those who give up on the way. 

This is personal and different for everyone. There can be many different reasons ‘why’ such as more time for family, projects, wanting a specific lifestyle. 

• Make a cup of coffee and sit down with a pen and paper and write down a few thoughts. Try and narrow down to the most important ‘why’. 

Others have started their debt-free journey and Tiny House interested. Take a look in the group Tiny House Europe Financially Free.

2. How Much Debt Do You Have?  

The next step is working out exactly how much debt you have.

You’re starting your journey towards a debt-free life. You need to know what it takes to get to this point. 

This is every single penny that you owe to someone else added up as one number. 

Yikes! Yes, I know.

This can be daunting for some and maybe a little complex for some people to calculate.

But it’s a very important step to working out how big of a journey this is going to be.

• Adding your interest rates is also a part of the calculation. Use this calculator for adding up your loans with different interest rates. 

3. Where Does Your Debt Free Journey Begin?

The next step is working out what your current financial situation looks like.

This is needed to work out how you are going to be able to pay off this debt.

Are you in a situation where you have extra on the bank account every month and happen to be spending it on ‘nice to have’s’?

Or are you spending more than what’s coming in? Then you’re heading in the wrong direction at the moment!

Taking a look at your expenses every month and working out and which areas you can cut back is crucial to how fast this debt is going to be paid off.

• Open up your bank statement for the last 3 months and see where your hard-earned money is going towards.

It can be quite rewarding tracking your progress and financial situation every month with a quick overview. Get started on your first one and find inspiration in the Monthly Financial Updates.

4. Adjusting Your Priorities

You have previously worked out your personal ‘why’ you would like to start your debt-free journey.

Now it’s time to work out how big of a priority this debt-free journey is to you personally.

Is it your number one priority at this point in your life?

Or is it ‘would be nice to get rid of’ and would like to focus a little more on this goal.

Working out this step has a great impact on the results and time it’s going to take to cross the finish line becoming debt-free.

While thinking about your priorities it can also be good to see how long it’s going to take with different amounts of payments.

• Use the debt-free calculator from before, type in your interest rate, and how much you owe and play around with the number: ‘How much extra can you pay each month’.

Notice the bonus effect of being able to save a lot of interest the more you can manage to pay off now. 

If your finances are complex give yourself the best guess of the amount of debt and a rough amount of interest rates.

Seeing and understanding how many months it takes to pay off your debt number can be a great motivation and an eye-opening task.

Click to read more on Why Simplifying Life Could Benefit You. 

5. Set a Goal to Become Debt Free and Make it Visual 

Once you’ve narrowed down how much you’re going to be paying off this debt per month, it’s time to increase your motivation.

You know how much you are paying off and how many months it’s going to take.

• Find and draw a visual representation of your debt-free journey and every month feel the joy it brings to be able to cross out another payment! 
  For the digital people download a FREE chart here, print it out and you’re good to go!

Debt-free living here we come. 

Read more on the most common questions about Financial Freedom.

Looking for inspirational read on your Debt Free Journey? I highly enjoyed the book Walden on Wheels. On the Open Road From Debt to Freedom. An interesting read for us alternative living minded people!